situation · 7 min read
Selling a house during bankruptcy: what's allowed
Chapter 7 and Chapter 13 affect what you can sell and when. The basics, and how cash sales fit in.
Chapter 7 — the trustee may control the sale
In Chapter 7, the bankruptcy trustee takes control of non-exempt assets. The trustee may sell the house and use proceeds (above homestead exemption) to pay creditors. You usually need the trustee's permission to sell directly.
Chapter 13 — court approval required
In Chapter 13, you keep your assets but the bankruptcy court oversees any sale. You need court approval for the sale and the use of proceeds. Adds 30-60 days to a typical timeline.
Homestead exemption
Most states protect a portion of home equity from creditors — varies from a few thousand to unlimited (Florida, Texas). The exemption affects how much you keep from any sale during bankruptcy.
Why we don't advise here
Bankruptcy is a legal area where general guidance is dangerous. Work with a bankruptcy attorney — most do an initial consultation free. We'll work with whatever your attorney recommends.
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